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In this paper, we are interested in a model related to a number of periods of Company's activity.The Company calculates an amount s which then could be given as a supplementary interest to the shareholders. This calculated amount is taken from the risk reserve. Let us assume the risk reserve = S at the beginning of an operating period. If the Company gives an amount s to the shareholders, then the risk reserve is S — s. (Borch 1972; Seal 1969).We must determine the best policy of dividends, that is a rule which determines the payments to be made each year to the shareholders of the Company, maximising a definite criterion.The problem of dividends must be approached in the “dynamic programming manner”. Indeed, the payments of dividends have an effect upon further gains of the Company and its capacity to pay dividends in the future.The objective of the Company is, for example, maximising the average utility of the dividend payments, which is calculated according to the distribution of claims. (Borch 1964a; Wolff 1966).

The objectives of the article are: firstly, to identify the principal factors which determine interfirm variation in dividend policy within the UK; and secondly, to examine the effect of dividend policy on company stock-market valuation. This cross-section empirical study is based on a random sample of 60 publiclyquoted British companies, and refers to the year 1970. The Lintner (1956) model is rejected, in that capital requirements and earnings risk are seen to play an important part in determining dividend policy. The ‘dividend neutrality’ hypothesis is strongly rejected once risk and profitability-of-retained-earnings are taken into account.

This paper seeks to expand upon an aspect of rights issues investigated by Merrett, Howe and Newbould in Equity Issues and the London Capital Market, of the prediction of the ex-rights price. It is suggested on the basis of an Australian sample that the London results are sustained, but that varying the assumptions made we are able to extend our knowledge of the adjustment of share prices to the new information which becomes available in relation to rights issues. This study supports the opinion that the market is comparatively efficient in its assessment of ex-rights prices.

IN September 1962 Charles Holt [1] published in the Journal of Finance an article entitled "The Influence of Growth Duration on Share Prices." In the article he put forth a model for determining the appropriate relative P/E ratio for a growth stock as compared to a standard stock. In December of the following year Burton Malkiel [2] published in the American Economic Review an article entitled "Equity Yields, Growth, and the Structure of Share Prices." Malkiel presented an independent approach for valuing a growth stock relative to a standard stock. Both articles have been widely quoted and reprinted. And both have provided a foundation and impetus for further research into share valuation. Perhaps an indication of the continued importance of this material to the finance field is the inclusion of one or the other of these articles in the equity valuation sections of the most recent editions of graduate level readings books [3, 4, 5]. Further, while both models were developed under conditions of certainty both have been used successfully to investigate the factors affecting stock values under uncertainty [1, 2, 6, 7]. Thus their analyses continue to be useful in providing a conceptual framework and an operational methodology for stock valuation. While the similarity of the Holt and Malkiel approaches to the valuation of growth stocks has long been recognized [2, footnote 20, p. 1020], this similarity has not been examined analytically. The purpose of this note is to show the algebraic equivalence of the Holt and Malkiel models. This demonstration is useful, given the continued significance of these models, as an aid to teachers and students in reconciling Holt and Malkiel's specific valuation concepts. Further in demonstrating that these models are equivalent, it is seen that both models have as their common foundation the dividend capitalization model of share valuation. (That the Malkiel model is based on the dividend capitalization model can be readily seen from inspection. However, this is not the case with the Holt model.) Finally it will be seen that both the Holt and Malkiel models yield the relationship between P/E multiples for any two successive time periods recently derived by Robichek and Bogue [8].

This paper suggests that it is not possible to demonstrate, using the best available empirical methods, that the expected returns on high yield common stocks differ from the expected returns on low yield common stocks either before or after taxes. A taxable investor who concentrates his portfolio in low yield securities cannot tell from the data whether he is increasing or decreasing his expected after-tax return by so doing. A tax exempt investor who concentrates his portfolio in high yield securities cannot tell from the data whether he is increasing or decreasing his expected return. We argue that the best method for testing the effects of dividend policy on stock prices is to test the effects of dividend yield on stock returns. Thus the fact that we cannot tell, using the best available methods, what effects dividend yield has on stock returns implies that we cannot tell what effect, if any, a change in dividend policy will have on a corporation's stock price.

Because of the scope of the study, it is not possible to make general statements about the exact variables which should be used in client-specified valuation models. However, the interpretation of the results of the study suggests several tentative conclusions.First, the investor's investment analysis of common stock appears to be a multi-dimensional process. That is, more than one decision variable is involved in the analysis. Hence, it may be reasoned that client-specified valuation models should involve several independent variables.Second, the dividends factor is the most important of the three factors identified through factor analysis. This finding suggests large differences in perceptions among investors concerning the importance of dividends.Third, future expectations and financial stability are the other factors identified through factor analysis. These factors also represent areas of large perceptual differences among investors concerning their importance.Finally, investors are of two distinct types: those who seek dividends and those who seek capital appreciation. This finding provides a partial explanation for the inability of researchers using traditional methodology to predict a firm's stock price behavior. Thus, investors do not comprise a single homogeneous class. This suggests that certain types of stocks prove attractive to particular types of investors, i.e., a "clientele effect." Hence, it is recommended that researchers interested in share price research segment the market by class of investor. Such investigation of investor socioeconomic and behavioral characteristics should prove worthwhile in providing a greater understanding of the factors influencing investor behavior.

Investors’ alleged preference for current rather than future dividends cannot, it is argued, be explained by the hypothesis of a progressively higher discount rate for more distant dividends to reflect increasing riskiness. It is more likely to be caused by inadequate standards of disclosure by companies concerning their intended uses of the funds retained by them, as compared with the standards required for external sources of finance, and by the market's consequent lack of confidence in the productivity of the former.

LIKE THE MYTHICAL SERPENT who grew two heads for every one he lost, the dividend policy-share price controversy lives on. In a recent issue of the Journal, B. Wallingford [6] derives the optimal dividend policy for a firm whose shareholders are governed by an exponential utility function. The purpose of this comment is to suggest that Wallingford committed an error of omission and that had he considered the problem in its totality, he would have found that share prices are independent of dividend policy regardless of the utility function assumed. In his introductory remarks, Wallingford notes that the dividend debate originally centered on the interrelationship between dividends and investment; with the early proponents assuming (usually implicitly) that dividends and investment expenditures are necessarily inversely related. He then credits Modigliani and Miller [3] with demonstrating that this inverse relationship need not apply when external funds are available and with arguing that, in the absence of such a relationship, dividends are irrelevant for share valuation. But having cut off one head, another immediately appears. For in the next sentence Wallingford states that, "Gordon [1], Lintner [3, 4] and others have pointed out that the Modigliani and Miller argument hinges entirely upon the assumption of the invariance of the discount rate to changes in dividend policy." This observation is the starting point for the author's own work. The basis of Wallingford's model is a valuation equation which represents the current price of the firm's shares as the present value of the certainty equivalent dividend stream discounted at the riskless rate of interest. On the assumption that external equity capital is freely available to the firm, Wallingford uses the familiar sources-equals-uses approach to express the firm's dividends as a function of its earnings, investment and external capital streams. He then calculates the certainty equivalent of this stream assuming that shareholders have a common exponential utility function for dividends. Finally he substitutes this certainty equivalent into the valuation expression and solves for the share price maximizing external capital stream. From there, it is a simple matter to return to the sources-equals-uses equation and to solve for the implied optimal dividend stream. In doing this, Wallingford would seem to have not only demonstrated that dividends are relevant for share valuation, but to have actually solved for the optimal dividend policy in the specific case of an exponential utility function. However, because Wallingford omitted an important element in the problem, his results are not generally valid. To the extent that this is true, the earlier referenced observations of Gordon and Lintner are erroneous as well. The element omitted by Wallingford is the fact that shareholders are not dependent on the firm and its dividend policy for the stream of cash receipts they receive from their shares. If the dividend stream offered by the firm is not the receipt stream they desire, shareholders can alter it by either buying or selling the firm's shares. Thus, when the dividend is too large, the shareholder can reinvest a portion of it in the firm's

GAINING market share is a key factor in reaching a leadership or number one position in any industry. It is particularly important to the achievement of a high volume of profits that can be used to expand a firm's business and pay dividends to stockholders, and to the attainment of leadership profit performance as measured by return on sales and return on investment. It is well documented that the higher a firm's market share the larger its cumulative production of a product, the lower its costs, and the higher its profitability.' However, gaining significant share requires careful planning, thoughtful, well-executed market strategies, and specific account-by-account tactical plans. It requires a comprehensive, well-thoughtout, and well-planned program. The purpose of this article is to present such a comprehensive program for gaining market share: to examine ways of increasing share, the key steps in planning market share gains, and the pitfalls that must be anticipated in implementing such a program.

The question how a company should payout dividends has led to some controversy (see [2], p. 164). At first sight it seems that the payment of dividends could be reconciled with the safety of a company by the following rule: “At any payment date, determine the dividend such that the resulting probability of ruin is equal to some given level e.” But, as De Finetti points out (see [5]), repeated application of this rule leads to eventual ruin of the company (with probability one). Alternatively, he suggested that dividends could be determined in order to maximize the expected sum of the discounted dividends. This idea has inspired a series of writers, among others Borch, Morrill, Miyasawa (the reader will find references in [2], pp. 164–178, and [9], pp. 163–166).

Because growth, dividend policy and capital costs are central to mach of modern valuation and regulatory theory, it is deemed important to examine them anew in light of existing criticism. The purpose of this paper is , therefore, threefold: to derive and test a finite-growth model for electric utility shares which accurately reflects the present value of future investment, to provide new evidence on the dividend policy-share price controversy, and to present estimates of the required rate of return, or cost of equity capital, to the electric utility industry over the period 1960-68.

Next to England, Germany is the country in which the principles of life assurance have had the most successful development. It is true the more recent French Companies, La Caisse Paternelle, L'Equitable, La Caisse des Ecoles et des Families, which also call the assurances granted by them assurances sur la vie, show a greater extension in a shorter time; but what they guarantee to the public are not life assurances in our sense of the word. They are neither assurances granted for previously specified sums, nor is the payment of the claim dependent on the death of the assured. The more modern French life assurances are rather indefinite reversions obtained by paying in any sum the assured pleases, the interest of which (as in the Tontines), according to the mortality found to prevail in the different classes, may prove sometimes greater, sometimes less, and is only divided amongst those who attain the term of life which may have been previously agreed on. The contributions of those who die early, together with the interests thereon, go to augment the dividends to the surviving members. Whilst life assurance amongst the English and Germans is therefore calculated to be on the death of the assured a source of provision for their families, the more recent mode of life assurance amongst the French principally aims at granting to the assured himself, in his lifetime, an annuity or sum of money, which, increasing according as the computations are made for an earlier or later period, affords him the means of extending his business, of completing his education, of securing a dowry on marriage, or a provision in old age. In consequence, partly of the prospect of selfenjoyment of the reserve thus made, partly the possibility of obtaining a high profit for a small investment through a greater mortality in the classes than the tables assumed, this kind of assurance became very much in vogue amongst the French. Recently, however, a clearer understanding of the matter, and the exposure of some deceptions which a few of the Companies or their managers have been guilty of, have in some degree cooled the public favour.

P ROPONENTS of the random walk hypothesis have argued their case on theoretical,' empirical,2 statistical,3 and historical 1 grounds. Only the historical approach deals with actual investment decisions, yet the problem of collecting data has been so great that studies have been limited primarily to open-end mutual funds. There are sound reasons; to suspect that conclusions based on historical mutual fund performance may not be applicable to all other classes of investors. The Value Line Contest in Stock Market Judgment'! provides a unique opportunity to analyze the stock selection ability of a large number of private investors. The contest requires self-selected entrants to submit a list of twenty-five stocks, chosen from a master list of about 1200 stocks followed and rated by Value Line. Six months after the entry deadline, each stock's performance (including capital gain and dividend distribution) is calculated. Prizes are awarded according to the average performance of the twenty-five securities comprising an entrant's portfolio. In a study of the 1965 contest,Shelton concluded: "The evidence from the study indicates that the stock market, during at least the six months of the contest, had enough elements of predictability that it is difficult to believe the price changes were generated randomly." The present study arrives at a similar conclusion. Taken together, the results of these two contests raise very serious questions about the usefulness of the random walk hypothesis as a description of the investment environment. In succeeding sections we will describe some differences in contest rules between the 1965 and 1969 contests, review Shelton's data and conclusions, present our data and conclusions, and discuss potential problems in the study.

relatives. This is reality in a limited sense, to be sure. It does not transcend daily life or reveal unseen significances. It leaves the spectator pretty much where it finds him. He may, by identification with what is shown to be pretty much the common lot, be rather more reconciled to his life than before, but he has not been raised above it or stimulated to some degree of revolt against it. Even the warmth that spreads to him from the small heroisms or the worthy sentiment which these "real" characters display is hardly more than a flattering unction to his own soul. The dividend is complacency, a coin which does not purchase renewal of spirit. Two films recently shown throw some light on these speculations. Both are the work of the same director, David Lean. The earlier, This Happy Breed, is a "realistic" film in the sense of the word commonly used in critical comment; the latter, a film play based on Dickens' Great Expectations, has, for curious reasons, a far greater sense of reality. Both are admirable works in their respective genres and both are marked by this brilliant director's imaginative and sensitive perception of character and his acute use of the screen medium.

THE economic package which Mr. Wilson presented to Parliament on 20th July to meet Britain's latest sterling crisis is a negation of all he and his followers have stood for and a severe defeat for all that he and his Government have been trying to do up to now. Very briefly, since gaining power in October 1964 the Wilson Administration has sought to avoid the two classical and well-tried remedies for restoring balance to an overstretched economy which, for historical and structural reasons, is perhaps more exposed to external economic forces and financial pressures than any other. On the one hand, the Government rejected devaluation utterly and, on the other, it shunned from making its deflationary policies work. The efforts to avoid a forced devaluation have been successfully supported by the international community but with the proviso that Britain should halve its 1964 deficit in 1965, should eliminate it altogether in 1966 and should begin to repay the IMF debts which were incurred $1 billion in December 1967 and $1.5 billion in May 1970. The 1965 objective was duly reached. The overall deficit was cut by more than half from well over $2 billion to $1 billion. The return of confidence during the year brought a reduction in the adverse balance of monetary movements, in fact, of $1.4 billion. Exports rose by 7 per cent and imports hardly at all. The Central Banks gave further facilities to sterling in September. The giltedged market rallied strongly between July and October and this was reflected in equity markets despite continuing measures to restrict credit of every kind. Reported pretax profits and dividends rose by 13 and 12.8 per cent respectively during the year. But, in fact, wages continued to move ahead twice as fast as prices and prices rose more than double the rate of output. By the end of the year total output stood about 2 per cent above a year earlier compared with increases of 4 and 5 per cent respectively during 1964 and 1963. Retail prices increased by 41/2 per cent and hourly take-home pay by 91/2 per cent, the highest recorded since 1952. Output per head in manufacturing was up by a diminutive 11/2 per cent though, due to the many cuts in working hours, output per man-hour went up by a more respectable 3?12 to 4 per cent. Dividend payouts were also inflated to forestall the forthcoming Corporation Tax. As Mr. Wilson put it, when presenting his package, money incomes in 1965 rose by over $5 billion compared with the year before whilst the overall rise in production was a mere $1.7 billion. "These trends", Mr. Wilson openly admitted, "are continuing . . . and the time has come to call a halt." In short, the attempt to operate a policy for prices, incomes and productivity in an over-inflated economy has proved more than doubly abortive. Its failure was compounded by Mr. Callaghan's post-election Budget of 3rd May which was entirely devoid of any attempt to "take a view" on the economy. Instead, he rather cavalierly postponed the target for bringing Britain's payments into balance until mid-1967, announced that the import surcharge would be abolished in November and came forward with a selective payroll tax which was to take some $900 million out of the economy in the fall in order to pay two-thirds of it back to manufacturing industry early next year. Its novelty, ingenuity and complexity, and its attempt to kill several policy birds with one stone, still has everyone guessing as to its ultimate effect but in the words of the authoritative Banker it seemed to be "no way to cure a deficit". In fact the incomes policy failure of 1965, and beyond, soon began to show up in the figures. First and

The purpose of marketing or, indeed, any organisational function is to help best achieve the organisational objective. Consequently, different objectives require different marketing strategies. In this article the objective of the chief executive shall be assumed to be the maximisation of trading profit on total investment. Trading profit is the profit after deducting bank interest, but before deducting long‐term loan interest, taxation and dividends: this is because bank interest is within the control of the chief executive, but these other charges are not. Total investment is the capital made available by the board of directors to the chief executive and includes ordinary shareholders' funds (ordinary share capital and reserves), preference capital and loan capital.

An investor who put £1,000 into 2½% Consols at the end of 1947 and reinvested all his gross income in the same stock at the end of each year would at the end of 1970 have stock valued at £921. Adjusted to take account of inflation, in 1947 £'s his investment with all income reinvested is worth £365. Why bother to revisit the gilt-edged market?An investor who put £1,000 into 2½% Consols at the beginning of January 1971 and reinvested the gross dividends as they were received in the same stock would, by the middle of September 1971, hold stock worth £1,194. He is showing a 19% return on his investment after under ten months. I do not wish to draw the conclusion that we have reached a new dawn in the gilt-edged market. I draw the conclusion that money can still be made in gilts. It is a market worth revisiting.

During 1918–20 twenty-four states enacted some form of pension legislation for public officials and employees. Congress established a retirement system for civil service employees. Various Canadian provinces, several British colonial governments, and a few European states legislated in favor of civil pensions.In the United States this recent activity is the culmination of a half century of agitation, experimentation and controversy in the matter of civil pensions, whether national, state, county or municipal. Private pensions in various American industries have doubtless favorably influenced the development of government pensions.This development has resulted in the use of many conflicting definitions of the term “pension.” Due to some aversion to that word, many confusing substitute terms have been used such as: retirement system, vocational insurance, deferred pay, indefinite leave of absence, retiring salary, graduated bonus, gratuity, annuity, superannuation allowance, service relief, old age assurance, provident fund, actuarial equivalent, and public officers' guarantee fund. As used in this article the term civil pension is intended to imply a regular allowance granted to a person for that person's maintenance or the maintenance of one or more persons dependent on the pensioner, that allowance being usually paid in consideration of the pensioner's meritorious services to the grantee; but it may be granted as a deferred wage or salary, as an annuity or as a form of regularly paid charity without reference to any consideration of gratuity, of wages, or of deferred dividends.

SINCE our geographical frontiers are limited, the only physical world that remains to be conquered depends upon the application of scientific effort. Recognition of this fact during the past quarter-century has led to a greatly increased appreciation of the necessity for and value of industrial research laboratories. Although such laboratories may, and often do, contribute to the sum total of fundamental scientific knowledge, their principal function is to apply such fundamental scientific information for the general benefit of man. As a matter of fact, scientific research would be no more than an expensive hobby if there were not the hope that some day the results might be applied to a practical purpose; and this is true no matter how "pure" or fundamental the research may be. A government survey showed that expenditures for research of manufacturing corporations increased from $116,000,000 in 1930 to over S240,000,000 in 1940. In the latter year there were 265 industrial ...

The process of incorporating was not conducted exactly in conformity to the corporation laws of the state of Missouri. In fact, the most accurate way of describing what was done in this respect is to say that the process was omitted altogether. It was desired to avoid the error of attempting too much, and to this end some things were assumed as having been done. The major operations of the board were as follows: 1. Organization-President, Vice-President, Secretary. The Treasurer was an appointee of the general manager. 2. Selection of general manager. 3. Setting amount of capital stock, $300,000. 4. Adoption of general manager's report showing that a gross profit of 35 per cent would be necessary to pay a dividend. 5. Adoption of general manager's pay-roll schedule, in the construction of which she had been assisted by the department

The widely accepted method of valuation is to estimate the average earnings and dividends for a period of years into the future and capitalize these elements at an appropriate rate. The trick is choosing a growth factor for the company. This article explores two approaches to finding the multiplier of past earnings. In the first, the analyst derives an independent value to compare with the market price. In this study, the valuations took into account four historical elements—profitability, growth, stability, and dividend payout—which were applied as multipliers to average earnings for 1947-1956 (plus a 20 percent weight given to net asset value). Values of 30 DJIA stocks were compared with the value in 1957 of the DJIA and its average market level for the preceding 12 months. From this approach, prices were derived. The second approach is the reverse of the first: It starts with market price and calculates from it the rate of future growth expected by the market, from which expected future earnings are de...

Table 1 below lists the series used, their source and the results of the spectral estimates. The results of the harmonic trend version, as with the Canadian data, are generally favourable to the hypothesis with long cycles indicated in about three-fifth of the series, including most of the more important ones such as GNP, NNP, investment, employment, construction, prices, etc. The indication of a peak at 40 years in population and immigration, two very important variables in theoretical discussions on long cycles, likely reflects a very strong trend in these series which has been only partially removed. Again, the growth-rate version is extremely sympathetic toward the hypothesis, indicating long swings in 34 of the 44 series. This is likely the most significant result since taking first differences is currently the most popular method of trend elimination among long-swing students. It will also be noted that the period of the indicated swing in growth rates is shorter than that for deviations from trend. This conforms with results obtained by other workers, in the United States and Canada, using less sophisticated techniques. Those working with growth rates using some sort of moving average have found long cycles to be about 14 years in duration while those applying the same sort of method to deviations from trend have found long swings which average about 22 years. Thus, the overall results suggest that there are, in fact, long swings in the deviations from trend of a significant number of important time series, contrary to the findings of earlier spectral analysts like Adelman and Hatanaka and Howrey who found no evidence of long cycles in the series they tested. Given the results of Bird et al.8 which cast serious doubt on the reliability of the methods which have traditionally been used for the analysis of long swings, spectral analysis offers the most reliable and sophisticated method for investigating the existence of this phenomenon. While many may feel that their belief in long cycles has been vindicated by this note, we might add a note of caution that any chronologies of long swings based on the old techniques are still useless, given the biases uncovered by Bird et al. Not only existence, but chronology, will have to be the object of new techniques. 8 Roger C. Bird, Meghnad J. Desai, Jared J. Enzler and Paul Taubman, "'Kuznets Cycles' in Growth Rates: The Meaning," Indian Economic Review, VI (May 1965), pp. 229-239.

Any business endeavoring to succeed must be founded upon a sound financial basis, whether it is municipally or privately owned. The owners of a private utility are stockholders, and take profits on their investments through dividends. In the municipal utility the consumers, or tax-payers, are the stockholders, and do not directly receive dividends, but indirectly share in the profits, by being served free water for fire protection, street flushing, park sprinkling, etc. along with the rate adjustments, no tax levy, and other advantages. Adequate bookkeeping and accounting must prevail, in order to obtain efficient and accurate results. The first and most important division to consider is the "net income account/' which shows in detail the operating and non-operating revenue, and operating, maintenance, depreciation, sinking fund, and depreciation reserve expense. This makes known to the stockholders or consumers the net income and the sources and amount from which the income was derived and for what it was expended. It also reveals the proprietary increase for the year, and the amount available for betterments. This amount may be spent for new equipment and extensions, which are betterments, and increase the fixed assets of the utility. A statement exemplifying the additions and constructions, along with the sale of old equipment and depreciation reserve, enumerates the exact amount the plant has increased or decreased during the year. This difference added or subtracted from the value of the preceding year is the present valuation. The "balance sheet" is the most essential and interesting statement in any financial report, because from it you may visualize the assets you have, the liabilities you must meet and, most importantly of all, it enumerates the proprietary interest or what the public utility is worth to the city or corporation at the present time. Let us first consider the fixed assets and liabilities. These assets include the total value of land, buildings, distribution system, equipment, etc.

The raising of long-term funds by corporations is an area which has received little empirical attention. Logically it fits into the nexus of decisions which a firm makes concerning investment and the retention of earnings. This suggests that a full analysis of the subject should be made simultaneously with study of the others.1 However, in this paper we concentrate only on the resort by firms to the long-term capital markets, because the other subjects have received extensive study and because the resort to long-term markets exhibits a feature which is very difficult to incorporate into a simultaneous model. This feature is that in many periods a firm issues no long-term securities. Instead of analyzing investment, dividends, and finance jointly, we take as given for the financing decision the investment expenditure of the firm and its retention of earnings.2 As a result, the main alternative to the issuing of long-term securities is the use of short-term credit. The existence of this alternative means, in any case, that the resort to long-term external finance by a corporation may be somewhat divorced from its immediate investment needs. An issue may be postponed if conditions are temporarily

If an investor stays fully invested in "ups" move (bull markets) and sells out and stays liquid in "down" moves (bear markets), the result is good capital gains but long periods without dividends. If an investor stays fully invested in a diversified list of stocks, he has constant dividends but over the average long-term period little appreciation. We think that this dilemma can be resolved by (1) staying 100% invested all of the time, but (2) being in sound "fast" (cyclical) stocks in up moves, and (3) in sound "slow" (defensive) stocks in down moves. The key to this dilemma is as follows. The average fast stock in up moves gains about 1.6 times as much as the Dow. The average slow stock in down moves loses only about 0.8 times as much as the Dow. Although the difference between these ratios seems small, there is actually a difference of 100%, and this percentage, taken over a time span such as ten years, is very important. Actually, this 100% differential between fast and slow stocks is so important that in the several moves between early 1937 and late 1950 it could increase a fully invested fund an average of 35% a year, not including a constant dividend income. This is worked out in detail later.

THE RATE at which its earnings and dividends are expected to grow has long been recognized as one of the dominant factors influencing the value of a firm's shares. Based on this recognition, numerous writers have attempted to incorporate growth into rigorous, formal valuation models. Gordon,' following J. B. Williams,2 developed a very useful and widely adopted theoretical model of share price valuation. However, Gordon's model assumes a constant rate of growth, and this limits its applicability to those firms that are "normal", or average. Holt extended the formal theory to encompass the duration of growth as well as the actual rate, but among his conclusions was the following remark: 3

AN EXAMINATION of the steel industry by the writer in August 19591 concluded that the upward revaluation of the industry by the investing public, which began about 1953, had been largely completed. This conclusion was based on the fact that the improvement in steel earnings and dividends during the previous six years was not the result of any spectacular growth in demand for steel products. Instead, earnings gains resulted from internal cost control and an upward movement in prices that more than compensated for rising costs. It was suggested that in the future the companies would have limited ability to increase prices and that profit margins could be improved only by internal efficiencies that would be offset, in part at least, by the upward pressures of labor and other costs. The experience of the industry since 1959 is fairly well known. A lower level of demand combined with a stable to moderately lower price realization per ton of steel shipped resulted in a sharp contraction of profits. Relative to the market, steel stocks have moved down almost without interruption since the late summer of 1959.

'N THIS TALK l have decided to put particular emphasis on aspects of atomic energy which I conceive will especially interest this audience. It will of course mean less a complete treatment of certain parts of the subject "The Investment Status of Atomic Energy". My idea was to avoid -a balanced summary because these have been presented at many conferences and reprinted in financial periodicals. I have further modified my remarks in order to reduce the overlap with my article printed in the current issue of your Federation's ANALYSTS JOURNAL entitled "Uranium Demand and Supply". At the outset I would like to state a two-fold thesis. First, the atomic industry is moving swiftly and gives every indication it is just embarking on a period of rapid expansion. Second, the prices of atomic stocks by and large are currently capitalized at fairly high but not unreasonably high price-earnings ratios and fairly low but not unreasonably low dividend yields.

The assessment of ordinary shares is at present the subject of intense activity. A full-scale professional analysis of a particular share can, however, be a most formidable document and one which does not produce the answer to the question ‘What long term return can I expect from my investment?’ On the other hand a simple statement of dividend cover and dividend yield at the current price is clearly insufficient to decide on the merits of a share.This paper describes a method of assessing ordinary shares in terms of ‘expected yield’, i.e. the compound interest return which a long-term buyer would expect to obtain from his investment, and includes a note on a simple way of adjusting a company's published rates of dividend and earnings to produce a consistent growth record suitable for use in estimating the expected yield.

T HREE METHODS of finding the position of the decimal point in the quotient are in wide use: (1) inserting a caret; (2) making the divisor a whole number by multiplying both divisor and dividend by a power of 10; and (3) subtracting the number of decimal places in the divisor from the number of decimal places in the dividend. There are other ways of finding the position of the point in the quotient, but these three ways receive the most emphasis in the professional literature dealing with the topic. Frequently, the procedures followed in the first and the second methods are considered to be the same.

T~'~HE permanent-income hypothesis (PIH) regards both measured income and measured consumption as the sum of permanent and transitory components. In Milton Friedman's original exposition [9], the ratio of permanent consumption to permanent income is postulated to be independent of the level of permanent income, although this ratio may vary with several other factors (for example, the interest rate, the ratio of non-human [property] wealth to total wealth, and other taste variables). Furthermore, the permanent and transitory components of income are assumed to be uncorrelated, as are the permanent and transitory components of consumption. A final crucial postulate in Friedman's original formulation of the PIH is that of a zero correlation between the transitory components of income and consumption. This strand of the PIH, together with the other postulates, implies that total consumption (measured consumption) and transitory income are uncorrelated.2 Thus, the implied mar

SynopsisThe paper points out that, owing to the increasing complexities of U.K. tax legislation, it is no longer possible in the majority of cases to use unadjusted yields for comparative purposes in the selection or review of investments. The three main types of investment in respect of which yield adjustments to allow for the effect of taxation require to be made are considered, which are as follows :—(1)Redeemable investments.(2)Shares of U.K. companies which receive Double Taxation Relief because of their overseas interests.(3)Shares of foreign companies in respect of the dividends on which U.K. shareholders are entitled to claim Double Taxation Relief.The taxation assumptions which require to be made for the calculation of correct comparative yields on the above types of investments are discussed and formulae are given which make allowance for the effect of these assumptions. Comparative tables are also given showing the yields brought out on differing tax assumptions and on two different basic methods of calculating redemption yields.In the body of the paper the assumptions discussed and formulae given refer to a British life office or life fund doing business in the U.K. only; but in a short appendix mention is made of some further adjustments which may be required in the case of life offices which also do business abroad.

This study investigates the wealth effects of foreign direct investments on U.S. firms during the period of 1989-2000. Overall findings indicate that U.S. acquirers experience statistically significant wealth gains of 0.57 percent around the announcement of acquisitions. The wealth effects do vary with location of target firms and acquirers' industry affiliation. Acquisitions in Europe yield significant positive wealth gains while acquisitions in Asia/Pacific, North America, and Latin/Central America regions yield negative wealth gains. The highest wealth gains to U.S. acquirers occur when they acquire targets in France followed by acquisitions in the U.K. Canadian acquisitions, on the other hand, yield negative significant wealth gains. The highest wealth gains are also observed in the services industry followed by acquisitions in the manufacturing and food industries. Acquisitions in mining/extraction, paper products, and communications sectors, on the other hand, yield statistically significant negative wealth gains to acquirers. Introduction The U.S. foreign direct investment (FDI) has increased to $66 billion in 2000 from $33 billion in 1994. Europe and Latin America are the largest recipients of the U.S. foreign investments. There are studies (i.e. Zhang, 2001; and Ramirez, 2002) investigating the determinants of foreign direct investment at the macro level by using real GDP, the real exchange rate, and political factors. Foreign direct investment in the form of mergers and acquisitions (MA Dennis and McConnell, 1986; Dodd, 1980; and Asquith and Kim, 1982). Cross-border acquisitions can provide benefits to acquiring firms that might not be fully realized by their shareholders through cross-country portfolio diversification. Therefore, cross-border acquisitions may increase the value of a firm. These benefits arise from firms' greater ability to use their strategic advantages in international financial and product markets, which result from differences in such items as tax structures, markets for corporate control, government regulations, and technology. For example, Manzon, Sharp, and Travlos (1994) show that U.S. multinationals derive incremental benefits through foreign acquisitions by using their international financial networks to selectively repatriate dividends in a tax-beneficial manner. Heston and Rouwenhorst (1994) find that diversification across countries within an industry is a much more effective tool for risk reduction than industry diversification within a country. Several studies have investigated the wealth gains in international acquisitions. Among them, Vasconcellos, Madura, and Kish (1990) and Connell and Conn (1993) examine the mergers between U.S. and the U.K. firms; Kang (1993) and Pettway, Sicherman, and Spiess (1993) focus on mergers between U.S. and Japanese firms. Fatemi (1984) and Doukas and Travlos (1988) probe U.S. firms engaged in foreign acquisitions. Harris and Ravenscraft (1991) and Cebenoyan, Papaioannou, and Travlos (1992) investigate U.S. targets of foreign firms. Dewenter (1995) compares the wealth effects of U.S. targets (chemical and retail industries) of domestic acquirers versus those of foreign acquirers. Cakici, Hessel, and Tandon (1996) and Kiymaz and Mukherjee (2000) show that country diversification plays an important role in determining wealth gains to merger participants. …